Weekly Economic Summary: Good Data Except One Datapoint

Aug. 11, 2012 9:20 AM ET

In a week of generally good data, the wholesale sales data was troubling. Overall, sales collapsed. This data series continues to wobble, and my concern is data gathering or methodology being the problem - and not sales directly. Only time will tell, but it is strange that only one sector (which is sandwiched between manufacturing and retail) had a terrible month.

The Econintersect economic forecast for August 2012 shows continues to show moderate growth. Overall, trend lines seem to be stable even with the fireworks in Europe, and emotionally cannot help thinking this is the calm before the storm. There are no recession flags showing in any of the indicators Econintersect follows which have been shown to be economically intuitive. There is no whiff of recession in the hard data - even though certain surveys are at recession levels.

ECRI stated in September 2011 a recession was coming, and now says a recession isalready underway. The size and depth is unknown. A positive result is this pronouncement has caused much debate in economic cyberspace.

The ECRI WLI growth index value remains in negative territory - but this week is unchanged. The index is indicating the economy six month from today will be slightly worse than it is today. As shown on the graph below, this is not the first time since the end of the Great Recession that the WLI has been in negative territory, however the improvement from the troughs has been growing less good.

Current ECRI WLI Growth Index

Initial unemployment claims declined from 365,000 (reported last week) to 361,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate (background here and here). The real gauge - the 4 week moving average - declined from 365,500 (reported last week) to 368,250. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.